The 2012 Word of the Year: Transformation

In an industry obsessed with acronyms, inside phrases and overarching terms, there’s one word in 2012 that rises to the top for being the most used: transformation.

Transformation and its associated phrases, such as “transformative period,” are probably the most uttered and overworked. Channel executives, advocates and prognosticators – including myself – have used this family of terms to describe the sea-shift change in technology delivery from an on-premises, capital solution to a services, operational  model.

Managed services, cloud computing, software-as-a-service and hosting services have been around for longer than the Internet. Vendors and solution providers alike have offered such services through digital media since the 1970s. You could argue that AT&T and the old Bell System was among the first technology delivery services, and they date back to the early part of the 20^th century.

Transformation proponents will argue that cloud computing changed everything since it requires vendors and solution providers to adopt a radically different model than those associated with hardware and software sales. Perhaps, but this is still untrue. The model has existed for decades, in technology and other industries.

So why has transformation taken on such power in the past year? It’s a reflection of what transformation means and not necessarily the word.

First, transformation is always happening. The difference between now and previous movements is speed. The technology industry once had a decade to change, then it contracted to five years before the next major movement came along. Today, we have three simultaneous trends sweeping over the channel and IT marketplace: cloud computing, mobility and Big Data. And they won’t be the last. The pace of change is exceedingly difficult to keep up with.

As daunting as this is, it’s not impossible and, in many cases, well worth the journey. The services model, the outcome of transformation, is rich with promises of success. It provides vendors and solution providers with steady and predictable revenue and profit, infinite scalability, stickiness with customers, and potentially lower operating costs. This is a far cry better than the undulating sales cycles of durable goods and associated support services.

However, transformation in the context of services in the channel is scary, risky and uncertain. Services are raising the barrier to entry, extending the return on investment and require whole different sets of skills. Solution providers that could rest on their technical skills now must develop or acquire sales, marketing, customer relationship and project management skills. Additionally, they must develop the infrastructure capacity to deliver and support ever-increasing complex applications and professional support.

Given this context, we could just as easily replace transformation with “metamorphosis” as the outcome will render those who start the process completely different upon its conclusion.

And that’s the mistake that makes transformation ill-suited and overworked. The reason “services transformation” is overworked and overused is because we – as an industry – haven’t engaged in it. The channel has rested on its increasingly commoditized technologies and obsolete sales models for far too long. Disruption is coming fast and furiously not because some solution providers are better suited to the services model; it’s because they were either born into it or they were always we evolving.

The problem with transformation – particularly when paired with the word “period” – is it implies a beginning and end. True transformation is representative of different stages of evolution, and evolution is continuous process. As biology has proven time and again, organisms that fail to constantly grow and evolve often fall prey to more adaptable competitors. And this is what’s happening in the channel today.

Transformation isn’t a state; it’s an action. It’s a way to describe what you’re doing, not what you are. It’s the outcome of transformation – a new market, technology, specialization or model – that’s the purpose of this process.

What does it take to transform? Goals, planning, execution, governance, metrics and risk taking. If transformation is the most overused word in the channel, then these words are probably the most underused. Too often solution providers look for the quick fix to “transformative” challenges, meaning they will look to adopt a new vendor or technology rather than evolving their business. Research by The 2112 Group found that nearly two-thirds of the channel is not engaged in adequate business planning or management.

So transformation is tired, but not inapt. Perhaps we should carry transformation over into 2013, but reapply it to the management practices of the channel. If we’re to have a New Year’s resolution, it should be to transform our business thinking and practices to more sustainable modes that will support whatever trend comes through the industry.